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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2020

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 001-35547

 

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

36-4392754

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

222 Merchandise Mart, Suite 2024

Chicago, IL 60654

(Address of Principal Executive Offices, Zip Code)

(800) 334-8534

(Registrant's Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on which Registered

Common Stock, par value $0.01 per share

MDRX

The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes        No   

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes        No   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes        No   

As of July 27, 2020, there were 162,969,271 shares of the registrant's $0.01 par value common stock outstanding.

 


ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

FORM 10-Q

For the Fiscal Quarter Ended June 30, 2020

TABLE OF CONTENTS

 

 

  

 

 

PAGE

PART I. FINANCIAL INFORMATION

 

3

Item 1.

 

Financial Statements (unaudited)

 

3

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

27

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

38

Item 4.

 

Controls and Procedures

 

38

PART II. OTHER INFORMATION

 

39

Item 1.

 

Legal Proceedings

 

39

Item 1A.

 

Risk Factors

 

39

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

39

Item 6.

 

Exhibits

 

39

SIGNATURES

 

41

 

2


PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements 

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)

 

June 30, 2020

 

 

December 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

199,004

 

 

$

129,668

 

Restricted cash

 

 

6,194

 

 

 

7,871

 

Accounts receivable, net of allowance of $36,972 and $23,879 as of

   June 30, 2020 and December 31, 2019, respectively

 

 

415,848

 

 

 

459,751

 

Contract assets, net of allowance of $1,068 and $0 as of June 30, 2020 and December 31, 2019, respectively

 

 

99,675

 

 

 

95,982

 

Prepaid expenses and other current assets

 

 

149,080

 

 

 

147,990

 

Total current assets

 

 

869,801

 

 

 

841,262

 

Fixed assets, net

 

 

75,728

 

 

 

88,339

 

Software development costs, net

 

 

253,442

 

 

 

243,929

 

Intangible assets, net

 

 

343,636

 

 

 

374,142

 

Goodwill

 

 

1,361,406

 

 

 

1,362,017

 

Deferred taxes, net

 

 

5,333

 

 

 

5,704

 

Contract assets - long-term, net of allowance of $4,273 and $0 as of June 30, 2020 and December 31, 2019, respectively

 

 

47,553

 

 

 

67,559

 

Right-of-use assets - operating leases

 

 

107,661

 

 

 

98,020

 

Other assets

 

 

124,278

 

 

 

124,767

 

Total assets

 

$

3,188,838

 

 

$

3,205,739

 


3


ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(Unaudited)

(In thousands, except per share amounts)

 

June 30, 2020

 

 

December 31, 2019

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

75,552

 

 

$

104,014

 

Accrued expenses

 

 

190,645

 

 

 

270,662

 

Accrued compensation and benefits

 

 

82,097

 

 

 

68,569

 

Deferred revenue

 

 

366,378

 

 

 

379,843

 

Current maturities of long-term debt

 

 

374,538

 

 

 

364,465

 

Current operating lease liabilities

 

 

22,072

 

 

 

23,137

 

Total current liabilities

 

 

1,111,282

 

 

 

1,210,690

 

Long-term debt

 

 

661,703

 

 

 

551,004

 

Deferred revenue

 

 

12,055

 

 

 

12,337

 

Deferred taxes, net

 

 

23,940

 

 

 

21,038

 

Long-term operating lease liabilities

 

 

104,815

 

 

 

95,162

 

Other liabilities

 

 

32,114

 

 

 

30,320

 

Total liabilities

 

 

1,945,909

 

 

 

1,920,551

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock: $0.01 par value, 1,000 shares authorized,

   no shares issued and outstanding as of June 30, 2020 and December 31, 2019

 

 

0

 

 

 

0

 

Common stock: $0.01 par value, 349,000 shares authorized as of June 30, 2020

   and December 31, 2019; 274,463 and 162,969 shares issued and outstanding

   as of June 30, 2020, respectively; 272,609 and 162,475 shares issued

   and outstanding as of December 31, 2019, respectively

 

 

2,743

 

 

 

2,725

 

Treasury stock: at cost, 111,493 and 110,134 shares as of June 30, 2020 and

   December 31, 2019, respectively

 

 

(579,678

)

 

 

(571,157

)

Additional paid-in capital

 

 

1,920,645

 

 

 

1,907,348

 

Accumulated deficit

 

 

(95,248

)

 

 

(49,336

)

Accumulated other comprehensive loss

 

 

(5,533

)

 

 

(4,392

)

Total stockholders’ equity

 

 

1,242,929

 

 

 

1,285,188

 

Total liabilities and stockholders’ equity

 

$

3,188,838

 

 

$

3,205,739

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

(In thousands, except per share amounts)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software delivery, support and maintenance

 

$

256,021

 

 

$

285,023

 

 

$

519,633

 

 

$

560,535

 

 

Client services

 

 

150,202

 

 

 

159,437

 

 

 

303,303

 

 

 

315,974

 

 

Total revenue

 

 

406,223

 

 

 

444,460

 

 

 

822,936

 

 

 

876,509

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software delivery, support and maintenance

 

 

74,243

 

 

 

84,056

 

 

 

150,568

 

 

 

165,089

 

 

Client services

 

 

135,484

 

 

 

147,252

 

 

 

288,270

 

 

 

295,951

 

 

Amortization of software development and

    acquisition-related assets

 

 

32,012

 

 

 

29,030

 

 

 

62,653

 

 

 

57,252

 

 

Total cost of revenue

 

 

241,739

 

 

 

260,338

 

 

 

501,491

 

 

 

518,292

 

 

    Gross profit

 

 

164,484

 

 

 

184,122

 

 

 

321,445

 

 

 

358,217

 

 

Selling, general and administrative expenses

 

 

114,620

 

 

 

105,542

 

 

 

211,908

 

 

 

205,787

 

 

Research and development

 

 

48,282

 

 

 

63,414

 

 

 

110,437

 

 

 

127,724

 

 

Asset impairment charges

 

 

0

 

 

 

3,691

 

 

 

0

 

 

 

3,789

 

 

Amortization of intangible and acquisition-related assets

 

 

6,328

 

 

 

6,732

 

 

 

13,046

 

 

 

13,529

 

 

(Loss) income from operations

 

 

(4,746

)

 

 

4,743

 

 

 

(13,946

)

 

 

7,388

 

 

Interest expense

 

 

(11,395

)

 

 

(10,424

)

 

 

(23,618

)

 

 

(20,608

)

 

Other loss, net

 

 

(875

)

 

 

(144,994

)

 

 

(353

)

 

 

(144,481

)

 

(Impairment) recovery of long-term investments

 

 

(550

)

 

 

0

 

 

 

(550

)

 

 

1,045

 

 

Equity in net income (loss) of unconsolidated investments

 

 

16,834

 

 

 

218

 

 

 

17,034

 

 

 

154

 

 

Loss before income taxes

 

 

(732

)

 

 

(150,457

)

 

 

(21,433

)

 

 

(156,502

)

 

Income tax (provision) benefit

 

 

(6,873

)

 

 

527

 

 

 

(6,526

)

 

 

(1,405

)

 

Net loss

 

 

(7,605

)

 

 

(149,930

)

 

 

(27,959

)

 

 

(157,907

)

 

Net loss attributable to non-controlling interests

 

 

0

 

 

 

0

 

 

 

0

 

 

 

424

 

 

Net loss attributable to Allscripts Healthcare

   Solutions, Inc. stockholders

 

$

(7,605

)

 

$

(149,930

)

 

$

(27,959

)

 

$

(157,483

)

 

Net loss attributable to Allscripts Healthcare

   Solutions, Inc. stockholders per share - Basic

 

$

(0.05

)

 

$

(0.90

)

 

$

(0.17

)

 

$

(0.94

)

 

Net loss attributable to Allscripts Healthcare

   Solutions, Inc. stockholders per share - Diluted

 

$

(0.05

)

 

$

(0.90

)

 

$

(0.17

)

 

$

(0.94

)

 

The accompanying notes are an integral part of these consolidated financial statements.

5


ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

(In thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Net loss

 

$

(7,605

)

 

$

(149,930

)

 

$

(27,959

)

 

$

(157,907

)

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

918

 

 

 

(156

)

 

 

(1,594

)

 

 

539

 

 

Change in fair value of derivatives qualifying as cash flow hedges

 

 

1,084

 

 

 

42

 

 

 

611

 

 

 

174

 

 

Other comprehensive income (loss) before income

    tax (expense) benefit

 

 

2,002

 

 

 

(114

)

 

 

(983

)

 

 

713

 

 

Income tax (expense) benefit related to items in

    other comprehensive income (loss)

 

 

(280

)

 

 

(11

)

 

 

(158

)

 

 

(46

)

 

Total other comprehensive income (loss)

 

 

1,722

 

 

 

(125

)

 

 

(1,141

)

 

 

667

 

 

Comprehensive income (loss)

 

 

(5,883

)

 

 

(150,055

)

 

 

(29,100

)

 

 

(157,240

)

 

Comprehensive loss attributable to non-controlling interests

 

 

0

 

 

 

0

 

 

 

0

 

 

 

424

 

 

Comprehensive income (loss), net

 

$

(5,883

)

 

$

(150,055

)

 

$

(29,100

)

 

$

(156,816

)

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 


6


ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(In thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Number of common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

273,484

 

 

 

272,013

 

 

 

272,609

 

 

 

270,955

 

Common stock issued under stock compensation plans,

    net of shares withheld for employee taxes

 

 

979

 

 

 

459

 

 

 

1,854

 

 

 

1,517

 

Balance at end of period

 

 

274,463

 

 

 

272,472

 

 

 

274,463

 

 

 

272,472

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

2,733

 

 

$

2,719

 

 

$

2,725

 

 

$

2,709

 

Common stock issued under stock compensation plans,

    net of shares withheld for employee taxes

 

 

10

 

 

 

5

 

 

 

18

 

 

 

15

 

Balance at end of period

 

$

2,743

 

 

$

2,724

 

 

$

2,743

 

 

$

2,724

 

Number of treasury stock shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

(111,583

)

 

 

(105,879

)

 

 

(110,134

)

 

 

(99,731

)

Issuance of treasury stock

 

 

90

 

 

 

61

 

 

 

90

 

 

 

61

 

Purchase of treasury stock

 

 

0

 

 

 

0

 

 

 

(1,449

)

 

 

(6,148

)

Balance at end of period

 

 

(111,493

)

 

 

(105,818

)

 

 

(111,493

)

 

 

(105,818

)

Treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

(580,871

)

 

$

(525,613

)

 

$

(571,157

)

 

$

(460,543

)

Issuance of treasury stock

 

 

1,193

 

 

 

846

 

 

 

1,193

 

 

 

846

 

Purchase of treasury stock

 

 

0

 

 

 

0

 

 

 

(9,714

)

 

 

(65,070

)

Balance at end of period

 

$

(579,678

)

 

$

(524,767

)

 

$

(579,678

)

 

$

(524,767

)

Additional paid-in capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

1,914,816

 

 

$

1,858,319

 

 

$

1,907,348

 

 

$

1,881,494

 

Stock-based compensation

 

 

7,166

 

 

 

10,129

 

 

 

17,120

 

 

 

21,523

 

Common stock issued under stock compensation plans,

    net of shares withheld for employee taxes

 

 

(2,376

)

 

 

(1,373

)

 

 

(5,544

)

 

 

(6,711

)

Capped call transactions

 

 

797

 

 

 

0

 

 

 

797

 

 

 

0

 

Issuance of treasury stock

 

 

(440

)

 

 

(144

)

 

 

(440

)

 

 

(144

)

Warrants issued

 

 

682

 

 

 

682

 

 

 

1,364

 

 

 

1,364

 

Acquisition of non-controlling interest

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(29,913

)

Balance at end of period

 

$

1,920,645

 

 

$

1,867,613

 

 

$

1,920,645

 

 

$

1,867,613

 

Retained earnings (accumulated deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

(87,643

)

 

$

125,289

 

 

$

(49,336

)

 

$

132,842

 

Net loss less net loss attributable to non-controlling interests

 

 

(7,605

)

 

 

(149,930

)

 

 

(27,959

)

 

 

(157,483

)

ASU 2016-13 implementation adjustments

 

 

0